However, strong earnings growth as measured by the S&P 500, which in 2017 was 12 percent and last year was estimated to be 22 percent, is down going to slow down. Nuveen estimates it will only be six percent this year and five percent next year. This, Doll says, still means U.S. equities will be a good buy this year. But, he adds, not as good as in recent years because they will peak.
“U.S. equities,” says the Nuveen report, will “experience a positive report, but fail to reach record highs for the first time in 10 years.”
Why the slowdown?
Lower earnings here combined with a weaker dollar will mean this will be the year that foreign equities will outperform U.S. stocks, according to Doll.
The U.S. stock market, he says, will be “choppy and frustrating” this year.
That’s because there will strong factors boosting the market and some slowing it.
The strong factors pulling it up will include higher capital expenditures.
In the short term, Doll says investors should pick companies that are benefiting from economic growth.
Doll’s favorites are information technology, financials and health care companies.
Companies to underweight, Doll says, include utilities, real estate and materials.